It is a sad fact that contracts are often managed poorly within councils, government departments, non-for-profit organisations and businesses. Even a smaller organisation can have hundreds of active agreements, adding up to thousands of contract terms and clauses. Then there is the added tension of ensuring that the correct procedures are followed to establish the various contracts in a way that comply with your procurement policy. Unfortunately, none of these procurement policies, audit requirements and contract terms carry much weight if procedures are not controlled, and agreements are not monitored and enforced. A good contract management system can help your organisation to get the most out of the agreements that you have worked so hard to negotiate while reducing the exposure to risk.
Here are a few benefits that you can derive from an automated contract management system:
1. Greater Accessibility & Transparency
Contract management software allows organisations to store and organise contract records in an easily-accessible, centralised repository. This is especially true if you are working on a decentralised procurement model within your organisation. Agreements can be accessed and reviewed with the click of a mouse, taking the guesswork out of finding your contract documents and giving insight into which contracts are currently in place – no more need to waste valuable time searching for contracts in rusty filing cabinets.
2. Locate Important Data Quickly
Good contract management software allows on-demand searchable access to key data by contract administrators, managers and other stakeholders. This means no more paging through lengthy agreements to find your schedule of rates, insurances, progress KPIs, etc. A good contract management system will help you to be ultra organised and to turn contract data into powerful management information.
3. Keep Track of Important Dates
Automated reminders make it much easier to stay on top of expiry dates, auto renewal dates, performance reviews, etc.
4. Good Return on Investment
Contract management software can help you to optimise contract performance, vendor management, customer management, supplier/sourcing management, contract renewals, etc. This optimisation maximises your revenue and cost savings, enabling fast return on investment (ROI) – typically well under one year.
5. Greater Productivity
Contract management software automates and streamlines contract management processes and improves controls for optimized contract value, better governance and performance and faster workflow cycles. It reduces the time wasted on rework and manual workflow activities associated with the use of spreadsheets and older database technologies. It will also help you to standardise work procedures and to eliminate administrative mistakes.
All your contracts in one place make it much easier to comply with operational policies, regulatory requirements, and corporate performance requirements. Ensure you select a contract management system which is agile enough to shape around your procurement policies and management needs. It also needs to provide you with a clear audit trail on user activities. This will give you peace of mind that all boxes are ticked and sign-off to keep the auditors happy.
7. Management Reports at the Fingertips
Contract Managers are under increasing pressure to provide executive management with a wide range of reports. The result is that many contract managers are trapped for hours behind spreadsheets, pulling slides and figures together for meetings. A contract management system can empower contract managers to see their data through various filters, dashboards and tabular reports. This will make it easy for them to offer key reports in real time while being on the go. This will also enable them to spend more time on value adding activities (e.g. supplier interviews) and less on non-value adding activities (e.g. formatting spreadsheets).
Overcoming the Hurdles
A two-year investigation into Australasian procurement by the Financial Review Business Intelligence has ranked the major challenges currently faced by procurement and contract management professionals as follows:
Difficulty meeting compliance / probity requirements and expectations
- Easily demonstrate compliance and probity
- Reduce worry and stress knowing that your contract management system has created a working environment less prone to corruption and non-compliance.
Securing a contract is only a first step. Organisations also need to ensure that they are adequately managing the agreement throughout its lifecycle. Using the proper tools to track and monitor contracts in real time will impact your organisation in a positive way, and will make a big difference in managing supplier relationships, expenses and the quality enhancement of your overall procurement activity.